Rising gold prices have led experts to advise UK homeowners to review their home insurance policies to ensure that valuable jewellery is adequately covered.
Gold prices have climbed sharply in recent months, increasing by nearly 20% over the past six months and reaching historic highs. This rise means that the value of gold jewellery has also increased, creating a risk that existing insurance coverage may no longer reflect the true worth of these items.
James Constantinou, CEO of Prestige Pawn, said a customer recently brought in gold teeth valued at just over £300. Another client received £3,500 for a gold chain they had mistaken for costume jewellery.
The value of gold jewellery has also risen significantly. For example, a 66-gram 9ct gold bracelet was worth about £1,150 in 2022 but is now valued at around £1,850, or a 60% increase.
Constantinou noted that gold remains an attractive asset during economic uncertainty, offering returns that outpace typical savings accounts. He added that some people turn to gold as a quick source of cash when facing financial difficulties.
However, not all gold items are genuine. Constantinou warned that some customers have been misled by fake gold pieces, which can sometimes be hard to identify.
Pawnbrokers have reported increased gold transactions, with gold making up a significant portion of loans. Pawning, where items are used as collateral for short-term loans, is common, and most borrowers repay their loans and reclaim their items.
Experts advise sellers to weigh gold before visiting jewellers and check market prices to ensure fair offers. Caution is also recommended when dealing with online buyers, particularly when items are shipped without insurance.
Most home insurance policies provide coverage for jewellery and other valuables, but often include a “single item limit”, which is the maximum amount an insurer will pay out for any one item if it is lost, stolen, or damaged. Data from Defaqto shows that 65% of home insurance products set this limit between £1,500 and £2,500.
Angela Pilley, home insurance expert at Defaqto, warns that if the value of an item exceeds this limit and the homeowner has not informed their insurer, the payout could fall short of the item’s actual worth. For example, a gold ring now valued at £3,000 would only be covered up to the policy’s single item limit unless the insurer has been notified of the increased value.
To avoid this, homeowners should have valuable jewellery professionally revalued on a regular basis and disclose any significant changes to their insurer. Insurers typically require recent valuations because policies do not automatically adjust for inflation or market fluctuations.
Failing to update insurance coverage leaves homeowners vulnerable to financial loss in the event of theft, loss, or damage to high-value items. With gold prices rising, experts emphasise the importance of reviewing and updating home insurance policies to ensure that jewellery is properly declared and insured.
In summary, the surge in gold prices has made it more important than ever for homeowners to check their insurance policies and confirm that valuable items are covered to their current market value.
